Should the CAE opine on the design adequacy and/or operating effectiveness of the system of internal...

Should the CAE opine on the design adequacy and/or operating effectiveness of the system of internal controls regarding:

Reliability of financial reporting? Why or why not?
Effectiveness and efficiency of operations? Why or why not?
Compliance with applicable laws and regulations? Why or why not?

Solutions

Expert Solution

The CAE might opine on the reliability on the financial reporting because most of the work done now is on computers. And the management depends on technology for recording of the transactions and events and calculations. A lot of things Theare automatically recorded by the systemmon happening of an event. CAE can advise on how well the system can record transactions and their impact on other items of the financial statements.

The CAE cannot wholly tell about the effectiveness and efficiency of operations because most of the work done with reference to production and other activities, especially in manufacturing industries, are manual. Though machines and tools are used for production and the CAE can opine on their proper functioning but a lot of it depends on human efficiency and effectiveness .

There are many companies which design software in which the errors are automatically shown when something goes beyoung the compliance levels. As we can see in tally , regarding tax deductions allowed. So in some areas they can have an opinion if such softwares are there. However , mostly it is the job of the management and auditors to give opinion on the compliance of laws and regulations.

ekkarill92 answered 1 year ago

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